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Migration and Development in Russia: Old and New Challenges and Lessons for Migration Policy -- Peter A. Fischer
Session on Comparative Perspectives:
Migration and Development in Russia:
Originally, the history of Russia is the history of a great trek to the East. In the last fifteen hundred years Slavic people from South-Eastern Europe and Scandinavians mixed in settling down, conquering and defending what today is called Russia. During that process, the capital moved eastwards from Minsk to Novgorod to Moscow and to Petersburg (and back to Moscow). While the main settlement and the cultural and administrative centres always remained within the European part of Russia, the Russian Empire, blocked from growing further westwards, already in medieval times expanded into the huge territory behind the urals. 1620 it had conquered Western Siberia up to the Yenesi River, by the end of the 17th century Russians already had laid claim to basically all the Northern Siberian and Far Eastern territory. From the very beginning, the Russians required the sparse original population in the area to pay in kind taxes and started to exploit the natural richness of Siberia, at that time mainly in terms of furs. Later on, the focus of attention shifted from the flourishing fur trade business to the extraction of metals, originally ore and copper, latter on also gold, platinum and the "black gold" oil and gas. Furthermore, Siberia's enormous rivers offered a possibility to generate relatively cheap energy and at least in the summer to travel and transport goods relatively easily.
Apart from the enormous distances involved â€“Siberia and the Far East stretch over nine time zones and cover a territory as large as 1,4 times the US â€“ and the harsh living conditions â€“ average temperatures in Chuchotka for example fall from just above plus 5 in July to below -25 in January â€“ development of Russia's Eastern Territories were mainly restricted by the size of the available labour force there. At the beginning of the 17th century, approximately 200'000 native people populated Siberia and the Far East. By the end of the century, about the same number of Russians had immigrated there. From the very beginning, an important way to get people there was forced migration: already in the mid 17th century, exile to Siberia was an official form of punishment. In that sense, Stalin's infamous Gulag system where an estimated 10% of male population was sent to labour camps to build main infrastructure and to do work under conditions that were extremely tough and life-threatening, was only the cynic peak of a long-standing development strategy. However, from the very beginning, emperors with the exception of Stalin, but not his successors, realised that sustainable development would be impossible with at least a certain amount of volunteer migration and created different incentives, including tax exemptions and possibilities to become economically independent, in order to stimulate settlement in Siberia and the Far East. Thus, in the 18th century the Russian population in the Eastern territories increased to about 900'000, then reached 2,7 million by the middle of the 19th century, only to increase rapidly with the beginning of industrialisation, the construction of the Trans-Siberian Railway (beginning in 1890), which was helped by the abandoning of the serfdom which happened in Russia only in 1861 and which, after the removal of former restrictions to migration, saw many former serfs searching their future and luck in the East. Estimates put the population of Siberia and the Far East to about 5,8 millions at the end o the 19th century and to 10.6 millions in 1917, at the dawn of revolution (Heleniak 1999). At that time, 78% of people settled in Siberia were already Russians.
2. The Communist Decades of Planned Migration and Development
During communist times, a lot of effort was put into the economic exploration and industrialisation of Siberia. Due to the absence of a market system, development was to a large extend planned and neglected price signals and efficiency criteria, which resulted in a costly misallocation of resources. Originally, the construction of huge mining sites like Norilsk Nickel was mostly accomplished with forced labour. Stalin's Gulag System, established in 1924, reached its peak in the late 1930s and 1940s, a time, during which several dozens of millions of prisoners were sent East. From an economic point of view, this labour was almost free and thus used abundantly and very inefficiently. Starting in the 1930s, however, additional efforts were taken to draw volunteer labour into the East. Specialists having finished their education often were more or less rigidly placed in the Eastern Territories by offering them a first job (only) there. Moving back to another than the original place was hampered by the requirement to get a residence permit at the new place of residence, a permit that especially in the attractive large European towns of Russia was difficult to obtain. However, to keep people voluntarily settling in the East, a system of wage coefficients was devised, that allowed emigrants to up to double their salaries, depending the length of their stay in Siberia and the Far East.
But also volunteer migration was in fact much more expensive than recorded by the centrally planned firms. To provide the logistics and supply to the workers food and non-food items, a system of Northern shipment had been established, that shipped goods thousands of kilometres on the railway or indeed with ships around Asia. Its costs were estimated at up to 3% of GDP. Also, to keep people in the North, social amenities like better housing, schools and kindergarten were forcefully built at very high costs. The age of retirement was lowered for people working in Siberia by 5 to 10 years. Reportedly, still in the 1980s, the supply of food and the available housing was often better in the Far East than in Moscow.
During the Soviet period, the population of the Eastern Territories in Russia tripled from 10.6 millions in 1917 to 32.1 millions in 1989, increasing the share of total population living in Siberia and the Far East from 6% to 22%. Relative to the national average, people settling in the Eastern Territories were on average younger and better educated.
3. High costs of neglected economic fundamentals:
Obviously, the collapse of the Soviet Union was not just a collapse of a political system, but the result of an economic disaster. The degree of misallocation of resources and the focus on military strength rather than economic growth were simply no longer sustainable. The following economic transition manifested itself in a gradual liberalisation of prices, decrease of public activity and reduction of subsidies. Many large companies that lacked economic competitiveness, especially those producing for the military complex, stopped functioning properly. Most raw material business, from the oil industry over alumina to platinum and diamond extraction, however, was and remained a profitable source of export revenues. But being privatised and operating under close to market conditions, this businesses figured out their true costs of production, invested in modernising the sites and started to save costs by producing less labour intensive.
With the collapse of the Soviet System, many benefits of working in Siberia disappeared. A new Russian state that had to economise spending heavily reduced northern shipments from about 2% of GDP in 1992 to 0,13% in 1997. As a result, due to the high transportation costs and the small local demand, prices of most goods became much higher in the Far East than in Central Russia. Apart from those who lost their jobs, many residents in Siberia who had come to earn a better living felt that staying on simply made no longer sense. Our analysis of data for the years 1989 to 2000 shows, that net emigration peaked in the early 1990s, with some of the regions where the most harsh conditions prevail loosing more than 10% of their population in a year. While for about half of the regions the net effect remained below 10%, the other half lost between 10% and remarkable 60% of their population. Millions of people moved West and South. They moved back to Central European Russia, into the big towns but also to regional centres.
For the most affected regions, out migration caused serious problems especially because it were generally not the unemployed or the old who left, but the young and the bright who found other, better living opportunities elsewhere. As a result, municipalities were left with a relatively low tax base and above average share of people to support. To make things even worth, given the climatic conditions, supporting people in the North and Far East is very costly, often four to five times as expensive as it would be in centres in Central European Russia. Thus, some of the regions concerned where left with goods supplies that are much more costly there than in the rest of the country, a public sector that lacks financing and thus struggles to reliably offents%en the most basic services like hot water and heating supply and which is incapable of providing appropriate social and medical services. Also, the condition of the basic infrastructure as well as housing deteriorated. Asked why they stay, people remaining resident in such places most often state that they cannot find and afford appropriate housing in potential regions of destination, especially as nobody wants to buy their present homes. Troubles to find employment in another region ranges only second as reason to stay. Many stay because they lack the means to search for other opportunities, some living in very poor conditions.
It would be misleading, however, to conclude that the above bleak picture of living conditions is representative for all settlements in Siberia and the Far East and that sooner or later the Russian North will be depopulated. Rather, settlement in the Northern Territories has become more market driven. As our data shows, there has in recent years been net immigration again to places where the oil and other industry concentrates its field work. Some of these, like the Khanty-Mansiy autonomous region nowadays in per capita terms belong to the richest in the Russian Federation where the highest salaries are being paid. Furthermore, net migration resulted from both, large emigration and immigration streams. On average, three emigrants moved West along with two new immigrants to the North. People who immigrate are again relatively young and well educated. Often, their stay in the Northeast is a temporary step in their work career. Some exploration and production sites are nowadays even totally closing down in the harsh wintertime and use seasonal workers in summer. To find their employees, the generally well profitable businesses have to offer higher salaries and appropriate amenities. Often, too, they dominate one settlement and organise and provide there social and cultural services in lieu of the state.
Despite very serious changes and problems in some Siberian and Far Eastern Russian regions being caused by migration and economic transition, the overall population change has been relatively modest in the last ten years. The registered population in the Northern Territories decreased by just 4% from 30,5 millions in 1989 to 29,3 million in 2000. As mentioned, this is partly because migration happened within the territory rather than just out of it.
4. Old and New Challenges for Migration and Development Policy
So far, there is little of an explicit migration policy in Russia but some vague declarations and general programmes. However, the Russian experience with migration and development may offer some insights on old and new challenges for a migration and development policy.
1. Regional Policies that distort prices may have enormous hidden costs. The past ten years of economic transition have revealed the enormous costs of communist regional population and economic policies under a planning system that did not account for market prices. Its correction has left the "loosers" trapped.
2. Allocate costs of migration to employers. Had the Russian companies faced the true costs of their labour, misallocation with its expensive and sometimes tragic consequences would never have happened to such an extent. Working markets and thus also working migrants remain the best guarantee for efficient, development enhancing migration.
3. Help people to react to shocks. Given a strong geographic specifity of structural change, programmes that encourage the reallocation of population may actually be welfare enhancing. Apart from the general importance of flexibility enhancing market and institutional designs, specific programmes that subsidise emigration of certain groups of population of regions in decline may actually help to save costs. E.g., the world bank and some regional municipalities have designed programmes that help unemployed and pensioners to move out of the costly North and find a new living in more friendly places. Organisational problems as well as troubles with unclear administrative and financial responsibilities have so far hampered implementation of such programmes.
4. Consider the impact of migration on development. As the Russian experience illustrates once more, it usually are the regions of immigration whose development profits of migration â€“ the more so the better the migration streams correspond to economic incentives and the more migrants work. Emigration regions, however, may become subject of serious problems caused by brain drain and aging of population. While incentives to immigrate that cause costs which are socialised may cause misallocation of resources, administrative and political obstacles to labour migration for sure have high social and economic costs.
5. There are huge demographic challenges ahead. Russia, nowadays, faces a process of rapid demographic change. Population decreases fast, because during transition, fertility has fallen to an all time low while mortality has increased. Soon, Russia will face a lack of people in core working age and provided economic recovery continues, is bound to become a major immigration country as well. While so far, international immigration has little tradition in Russia and so far immigrants are often conceived as a threat mainly, the demographic trends suggest that Russia might soon be in need to become more attractive for immigrants.
Source: Goskomstat, own calculations.
 Dr. Peter A. Fischer, Economic Correspondent, Neue Zürcher Zeitung, Moscow Office, Kutusovski Pr. 13 Kw. 87, 121248 Moscow, e-mail: email@example.com